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THE HON DR CRAIG EMERSON MP

MINISTER FOR SMALL BUSINESS, INDEPENDENT CONTRACTORS AND THE SERVICE ECONOMY

MINISTER FOR COMPETITION POLICY AND CONSUMER AFFAIRS

MINISTER ASSISTING THE MINISTER FOR FINANCE ON DEREGULATION

Transcript SKY NEWS AM AGENDA Tuesday, 9 March 2010 Kieran Gilbert interviews Dr Craig Emerson and
Senator George Brandis

E&OE

____________________________________________________________

Subjects: Parental leave, Indonesian President's visit, people smuggling, defence spending.
______________________________________________________________

GILBERT: Good morning and welcome to AM Agenda. In this election year the first battle for the
working family vote has begun. Tony Abbott once said that paid maternity leave would be introduced
over his dead body. Well not anymore.

[Start of excerpt]

ABBOTT: I have changed my mind on this. I, as you know, am a pretty conservative bloke, but if we
are going to have a fair go for families, we've got to make it possible to combine motherhood and
having a job.

[End of excerpt]

GILBERT: Tony Abbott there this morning on Radio 2GB talking to Alan Jones. Joining me now on AM
Agenda, our regular Tuesday morning panel, the Small Business Minister Craig Emerson and the Shadow
Attorney-General Senator George Brandis. Gentlemen, good morning.

BRANDIS: Good morning Kieran, morning Craig.

EMERSON: G'day. Hello George. Thanks for having us on the show again.

GILBERT: An absolute pleasure Craig. The parental leave issue. Looks like Tony Abbott's trying to
outflank you, and he's doing a pretty good job because it's six months full pay. It's seen you and
raised you.

EMERSON: Well it's seen the corporate world and raised it too; raised taxes on companies, which he
said only a month ago he would not do. Tony Abbott said a month ago that there would be no new
taxes and no increases in taxes, his words, not mine.

GILBERT: But it's a vote winner.

EMERSON: Now he comes out and says....

GILBERT: Working families vote.

EMERSON: ...well I've changed my mind. Now it's one thing to change your mind compared with say
2002 to 2010. This guy changes his mind as often as he changes his undies or his budgie smugglers.
I mean honestly, the guy changes his mind within a period of a month, so what reliance can the
Australian people have on his word going into an election when he says this is my latest position
on a particular issue but I might change my mind and have another position after the election?

GILBERT: Why can't you change your mind in politics?

EMERSON: You can.

GILBERT: If you're talking about the substantial change here, it's on the policy, and he changed it
years ago and it was in his book, his advocating this.

EMERSON: And I'm not talking about the substantial issue. I'm not going to; others might argue that
he can't change his mind between 2002 and 2010, that's not my argument. Others may make that
argument and they're entitled to. My argument is this - that only a month ago, particularly when
Barnaby Joyce was on another television program saying well we might look at tax increases to fund
some of these thought bubbles that were coming out of the coalition - Tony Abbott explicitly ruled
it out. Now he's not only repudiated Barnaby Joyce, he's repudiated himself. This is the same guy
who said that he would never touch the Medicare safety net. He said it's a solid gold - a rock
solid rolled gold promise and after that election they changed the Medicare safety net. You can't
rely on the guy.

BRANDIS: Can I...

GILBERT: Can I - yeah, I want to get your thoughts on all of that...

EMERSON: Yeah, go George.

[Laughter]

GILBERT: It's your time to return serve.

EMERSON: I reckon George might disagree on it.

BRANDIS: And - but might I remind you that you're the party that gave a rock solid rolled gold
promise at the last election that you wouldn't interfere with the Medicare rebates, so let's not go
there Craig. Now look, let's get a couple of things straight Kieran, first

of all the Liberal Party always has been, always will be a party of lower taxes than the Labor
Party. During the last period of...

EMERSON: Not true.

BRANDIS: ...during the last period of Liberal Government we lowered the rate of personal tax in seven
consecutive budgets. That's the first point. Secondly, Craig is quite wrong when he says that this
is something that Tony Abbott has just - has changed his position on in the last month. If you look
at his book Battlelines, page 102 Craig, I'll lend it to you after the show, he specifically says
that it's fair that the cost of maternity leave ought to be borne by business and the art here was
to devise a system whereby small business was not affected and its cash flow wasn't affected and
the way in which he's done that, we've - decided to do that, is by imposing the levy only on big
business, so...

GILBERT: So why did he say there'd be no new taxes then last month?

BRANDIS: Well the Liberal Party will not be proposing new taxes; this will be a levy on businesses...

GILBERT: [Laughs].

EMERSON: A levy, not a tax.

BRANDIS: ...will be - this will be a levy on businesses with a taxable income of more than $5 million
a year so it's...

GILBERT: So it's a tax thought. I mean a levy, a tax, whatever you describe it as.

BRANDIS: Well you could have - look...

EMERSON: A surcharge?

BRANDIS: You can have a semantic argument about that and I don't want to go there. I want to deal
with the substance of the policy. It's a very attractive policy. It's much more attractive than
what the Labor Party's offered. It is, as Tony said yesterday, real money, and real time. Six
months, not 18 weeks and maintaining the income of mothers who decide to take advantage of this
policy at the rate at which they would have been in the workforce. Now...

GILBERT: Let's discuss the merits of that...

BRANDIS: Yeah.

GILBERT: ...in a moment. I just want to ask you about the philosophy though behind it. Because as a
Liberal Party...

BRANDIS: Yes.

GILBERT: ...you know, business is your core constituency and we've seen over the last decade or more
a gradual lowering of the company tax rate, it's now at 30 per cent and that was a by...

BRANDIS: As a result of Liberal governments.

GILBERT: And Labor governments, but it was a bipartisan position.

BRANDIS: Yes.

GILBERT: So why now are you throwing this anti sort of competitive levy, surcharge, whatever...

BRANDIS: Becau...

GILBERT: ...on business?

BRANDIS: Well I wouldn't say it's anti-competitive. It is a levy or a surcharge, but - and it's not
- wouldn't have been our first preference if the Rudd Government over the last two and a half years
hadn't blown the budget and taken us deeply into debt, then it wouldn't have been necessary to find
an off budget source to fund this promise.

But the promise is important. The money has to come from somewhere. And by the way Kieran, you said
the Liberal Party's always been the party of business; it's certainly always been the party of
small business, but it's never been the party of the big end of town. Big business has no natural
political home. It deals with Labor governments, it deals with Liberal governments, and the - and
this proposal quarantines entirely small business so we're asking big business who can afford to
pay, to pay.

GILBERT: Craig and the other thing is...

EMERSON: I have read this by the way.

GILBERT: ...that taking...

BRANDIS: Good on you.

GILBERT: It's a good read.

EMERSON: And he has changed his mind.

BRANDIS: Good on you.

EMERSON: He has changed his mind...

GILBERT: Craig.

EMERSON: ...he said there'd be a levy on small business in this...

GILBERT: Craig.

EMERSON: ...and he's changed his mind.

BRANDIS: And well...

GILBERT: Can I just...

EMERSON: Fine, but you said he hasn't changed his mind.

GILBERT: Gentlemen, gentlemen, please...

BRANDIS: But the policy can be refined, what's wrong with developing a policy?

EMERSON: Changed.

GILBERT: Okay, let me ask you about the point that George made about big business.

EMERSON: Yeah, well it doesn't sound like the Coalition's very friendly at all towards big
business. I regard that as a statement of hostility...

GILBERT: Okay well...

BRANDIS: You be the party at the big end of town Craig...

GILBERT: Okay...

EMERSON: We're governing for all of...

BRANDIS: You'll be good at that. You'll be good at that.

GILBERT: [Laughs].

EMERSON: We're governing for all Australia George, but we don't make hostile remarks.

BRANDIS: We'll look after families you look after...

EMERSON: We don't make hostile remarks about large corporations, which you derogatorily describe as
the big end of town.

GILBERT: You two have certainly had your Fruit Loops this morning.

BRANDIS: Craig, Craig...

EMERSON: He had a little bit of extra sugar on his.

GILBERT: [Laughs].

BRANDIS: We will look after families, you can look after Collins Street and Pitt Street...

GILBERT: Okay...

EMERSON: Now can I go to...

BRANDIS: ...but we'll look after families.

EMERSON: ...one point, this is a really important point.

GILBERT: Let me get you to answer that first. I want a - I want you to focus the drill down on that
issue, that big business, by and large, it's not going to bring you a lot of votes, they're
targeting working families. That was the battle ground where you effectively won the last election...

EMERSON: Well we'll certainly...

GILBERT: ...and this - they've outflanked you on this.

EMERSON: No that's not right.

GILBERT: This is a very attractive policy that - well you're saying that a mother who's at work and
she's going to be get...receive full pay out for six months is not better than minimum pay?

EMERSON: No, no, I'm just saying that the idea that the Coalition is the party of working families,
when we know that they'll bring back WorkChoices. It's their beloved WorkChoices.

BRANDIS: We won't bring back WorkChoices. No, don't make it up as you go along.

EMERSON: All of the three elements, the core elements...

BRANDIS: We've give you an undertaking - we've given the public an under...

EMERSON: Yeah, to change the name.

GILBERT: Let's just have the response.

EMERSON: To change the name, that's what you've said. Gee, that will be a great comfort to working
Australians, you'll get WorkChoices back...

BRANDIS: WorkChoices is dead Craig.

EMERSON: ...but they're going to call it something - some other - something else.

BRANDIS: What - Craig, whenever you get in trouble you default to WorkChoices.

GILBERT: Let's just hear Craig first.

BRANDIS: WorkChoices is dead, okay?

EMERSON: The name WorkChoices is dead, word to Tony Abbott. The point I want to make is that the
one that George has just made a little earlier is wrong, that the Coalition is the party of low
taxation. The record of high taxation is held by the Coalition, by the Howard Government, five
years of record taxation as a share of GDP.

And it took a Labor Government to cut the 60 per cent rate inherited from a Coalition Government,
to 49 per cent and to cut the second...

BRANDIS: That's a very long time ago.

EMERSON: ...and to cut the second top rate. The people who actually engage in tax cuts and all of
that, is Labor. But they talk the talk...

BRANDIS: Not...

EMERSON: ...and never walk the walk.

GILBERT: But you're still not answering the question.

EMERSON: [Indistinct]. Righto, let's have another crack at it.

GILBERT: I want you to answer a question about the working family vote, because they're - with this
policy, to a working family, to a mother about to have a child, getting full pay over six months,
it's obvious it's going to be more attractive than your 18 week at minimum payment.

EMERSON: Well make it a year, two years, three years. I mean the point is these things have got to
be paid for and what we're doing is economically responsible.

BRANDIS: Just tell me how we'll pay for it without taking the budget even further into debt than
you've taken it?

EMERSON: We are paying for our scheme. Our scheme is a financially responsible scheme. The only way
they can do this is a new tax, to break that promise of Tony Abbott and the people will judge. The
people will make a judgement as to who is more sympathetic and supportive of working families, when
we have provided tax cuts and education tax refund and gotten rid of WorkChoices and replaced it
with...

BRANDIS: Craig can you give it...

EMERSON: ...a fairer industrial relation system.

BRANDIS: ...can you give an undertaking Craig, that if the Government were to be re-elected, taxes
wouldn't increase to pay for Kevin Rudd's health and hospital plan?

EMERSON: Our undertaking is already - already in play, so now...

BRANDIS: Because last week Nicola Roxon, the Health Minister...

EMERSON: ...our undertaking...

BRANDIS: ...said they would.

EMERSON: You know George, our undertaking, and it is to not increase taxes as a proportion of GDP...

BRANDIS: Oh, the reason that hasn't worked...

EMERSON: ...and that has been the statement...

BRANDIS: Does that mean...

EMERSON: No, you are the record taxers in this country.

BRANDIS: Craig...

EMERSON: You get the gold medal for taxation in this country.

BRANDIS: Craig. Craig, Craig, let's...

EMERSON: But the Liberals wander around, say we're the party of low taxation...

BRANDIS: Settle down. Settle down, you're becoming excited.

EMERSON: Just completely untrue.

BRANDIS: Yeah, settle - you're becoming excited. Let me just bell that cat. The only reason you can
quote that statistic is because in the - during...

EMERSON: Because it's in the budget, that's why I could. [Laughs]

BRANDIS: ...because - no, no. Listen to me. Because during the Howard Government, the economy was so
prosperous, people were

making so much money, that tax records were at a - tax receipts were at a record high, that's
absolutely right. But people were paying increasingly lower rates of tax.

EMERSON: But you said - you said you paid it...

BRANDIS: People were paying increasingly...

EMERSON: ...you paid it, amassing these big tax cuts. It's on record...

BRANDIS: People were paying lower...

EMERSON: ...gold medal...

BRANDIS: ...rates of tax...

EMERSON: ...gold medal...

BRANDIS: ...the tax register...

EMERSON: [Indistinct]

GILBERT: George [indistinct].

EMERSON: Tax receipts. [Indistinct] lot.

GILBERT: Senator Brandis, well was the Shadow Cabinet consulted over this policy? It's a pretty big
initiative.

BRANDIS: A very long discussion about it.

GILBERT: So there was a discussion...

EMERSON: After it was announced.

GILBERT: ...[indistinct] Cabinet.

BRANDIS: We had a long discussion...

EMERSON: After it was announced.

GILBERT: The policy was put to your colleagues, Joe Hockey and...

BRANDIS: Well it had come to the party earlier this morning. But the Shadow Cabinet had a long
discussion about it.

GILBERT: So you knew this was coming ahead of yesterday?

EMERSON: No.

BRANDIS: I'm not going to talk about the processes of the party, but you asked if the Shadow
Cabinet talked about it, yes we had a long discussion.

EMERSON: The Shadow Cabinet met at 2 o'clock. Tony Abbott made this announcement to a women's
policy - or a women's audience, in the morning. I know the Shadow Cabinet...

BRANDIS: Craig, you seem to know about...

EMERSON: ...I do, I know.

BRANDIS: you seem to know more about what happens in the Liberal Party than...

EMERSON: You guys, you guys...

BRANDIS: ...you know what happens in the Labor Party.

EMERSON: It's true isn't it, the Shadow Cabinet met at 2 o'clock?

BRANDIS: Look, I'm not - I'm not going to talk about the processes of the Liberal Party's policy...

EMERSON: Well my point is that...

BRANDIS: You asked me if the Shadow Cabinet discussed the policy.

EMERSON: Tony Abbott made the announcement before...

BRANDIS: We had a long discussion about the policy and it was very enthusiastically received.

EMERSON: And endorsed?

GILBERT: Post - posthumously...

EMERSON: Endorsed?

BRANDIS: Well I'm not going to talk about the processes through which the policies are developed.

EMERSON: I didn't see anything in the paper about Shadow Cabinet endorsement.

BRANDIS: I'm not - I...

GILBERT: Okay.

BRANDIS: Well that's because - Craig, Shadow Cabinet meetings - actually...

EMERSON: Was it endorsed?

BRANDIS: ...Cabinet meetings are confidential.

EMERSON: But was it endorsed?

BRANDIS: But I can assure you...

EMERSON: But the outcome, at some point, shouldn't be.

BRANDIS: I can assure you the policy was very enthusiastically received.

GILBERT: Okay, let's pause. We've got to talk about some other issues, of course, after the break.

EMERSON: Yep.

GILBERT: The visit of SBY the Indonesian President.

Stay with us.

[Unrelated item - advertisement break]

GILBERT: Welcome back to AM Agenda, and our panel Craig Emerson and Senator George Brandis. The
Indonesian President, SBY is due to arrive here, I think, in about 15 minutes he's going to touch
down, the Prime Minister's going to be welcoming him.

EMERSON: Yep.

GILBERT: He's going to be addressing both Houses of Parliament. It's an important visit Craig. Just
how significant is it in the broader scheme of things?

EMERSON: Oh, very significant. A very large near neighbour.

Through the history of relationships, we haven't always agreed. I think the strength of a
relationship is how you manage your disagreements. And where there have been disagreements with the
Indonesian Government in the last few years, including under the Howard Government, I think they've
been managed pretty well.

So obviously we welcome President Yudhoyono's visit and look forward to his address to the
Parliament.

GILBERT: I spoke to the Foreign Minister Stephen Smith about this a little earlier this morning.
Let's recap a little bit of what he had to say about the complexities of the relationship.

[Start of excerpt]

SMITH: Because we're such close neighbours, there will always be issues. I think the depth and the
strength of the relationship these days is that we can have issues which may well be difficult,
whether it's issues of capital punishment, people movement, the Balibo Five, for example, but they
don't disturb the strength of the relationship.

[End of excerpt]

GILBERT: So the Foreign Minister saying that, you know, the Balibo Five, people smuggling,
difficult issues will always be a part of that relationship, but it's how they - how you manage
them and he believes that the relationship is strong enough to withstand that. Do you?

BRANDIS: Yes, I do and, Kieran, can I say at the outset that the Opposition of course warmly
welcomes the President of Indonesia. The relationship between Indonesia, although it's had its ups
and downs, is a very important relationship for Australia and there has always been a
bipartisanship on that.

The test for the Rudd Government though is whether one of the outcomes of this visit is to deal
with the issue of people-smuggling which, as you know, has got out of control ever since the
Government weakened the border - the previous government's border protection policies in August of
the year before last. Since that time there have been 88 illegal boat arrivals. There have been 20
so far this year and it's only the beginning of March. The summer is the monsoon season when these
boats tend not to set to sea so the period in which we would expect to see the - an increase in the
number of attempts to unlawfully enter Australia by sea is, in fact, in the months ahead.

Now, the Rudd Government has been hopeless on this. It's an acute issue in the relationship with
Indonesia. The Howard Government had the problem under control. The number of boat arrivals had
fallen to virtually nil. Now we've had 88 in a year and a half.

GILBERT: But the bottom line is the Indonesians, it's not as big a priority politically for them or
as a problem for them. It's 240 million people on our doorstep and they've got internally displaced
people.

BRANDIS: Sure.

GILBERT: They've got widespread poverty. It's just not a big priority.

BRANDIS: And that's the whole political point. It's not as big a priority for them as it is for
Australia and therefore the Rudd Government, with Mr Rudd's fabled diplomatic skills, has to show
that he can leverage a position to get the Indonesians to cooperate with the Australian Government
to a degree that meets the problem.

GILBERT: Craig?

EMERSON: Obviously I think - I agree with your point, that if you're trying to govern Indonesia
which consists of an enormous number of different islands and groupings of people, you can't expect
people-smuggling to Australia to be their number one issue. That's just reality.

GILBERT: What's the motivation?

EMERSON: It wasn't the number one...

GILBERT: What's the motivation for them to stop the boat when you've got internally displaced
people in Indonesia? And also it's not a crime, people-smuggling.

EMERSON: And I'm agreeing with you but we have been working with the Indonesian authorities on this
and, to an extent, but only a limited extent, George is right, you need to leverage the
relationship because otherwise if you didn't then there would be no priority whatsoever given to
it. And the fact that the Indonesians do take this seriously is a reflection of the relationship
but the number of boat arrivals is not a reflection of any deterioration of the relationship with
Indonesia but with the fact that there was a civil war in Sri Lanka which George and his mob like
to forget.

GILBERT: Let's just look at the broader issue because we've got plenty...

EMERSON: Yeah, I'm happy to do that.

GILBERT: ...of weeks to talk about that particular matter...

EMERSON: Yeah, yeah, exactly.

GILBERT: ...but on the issue of Indonesia, why don't Australians know more about this country? It's
240 million people on our doorstep. I mean, it's a closer flight than it is from Darwin to - why
don't we

know more about this country of such huge strategic importance to us?

BRANDIS: I think increasingly, particularly young generations of Australians do know a lot more
about Indonesia than perhaps people of my generation did when we were in our - in our twenties -
and I think that reflects the fact that Australia under both Labor and Liberal governments for 30
or 40 years now has been more and more focused on east Asia.

Now, I think that's a trend that will continue.

EMERSON: And I agree. By the way, The Australian National University has extraordinarily good
relations with the Indonesian Government. The Vice-President was actually at the ANU when I was
doing my PhD there and they've got...

GILBERT: The Foreign Minister did a PhD at ANU.

EMERSON: Yeah, very, very good relationship but it doesn't quite answer your question.

I think in relation - but it is - it's relevant to this extent. It's an example of how we're
reaching out to Indonesia and Indonesia is responding and those relationships which have involved
friendships over 20 or 30 years are yielding real benefits here, at the top level of the Indonesian
Government.

The rest of the question I think is - this is just a personal opinion. If you ask Australians what
they associate with Indonesia, they'd say Bali. Well, Bali is not Indonesia. Bali is not even, you
know, not even - they're Hindus in Bali and they're Muslims in Indonesia. It's a very different
culture and maybe with further opening up of tourist destinations, I know that there are other ways
to develop relationships but for average, everyday Australians, probably through tourism.

GILBERT: Yes.

EMERSON: And I think that's going to open up.

BRANDIS: That's all very well, Craig, but I mean, the acute issue in the relationship is the
explosion of people-smuggling activity since you weakened the policy.

EMERSON: And just when I thought your Fruit Loops were wearing off.

BRANDIS: No, no, no, no, and the test of the success of this visit is whether detailed and specific
measures are adopted to deal with that.

GILBERT: I think we were just on a friendly mood there...

EMERSON: Yeah, that's right. He's going to hoe back into the Fruit Loops...

BRANDIS: You know, I might say, on the issue of understanding of Indonesia, in fact, our Parliament
contains one of Australia's most distinguished Indonesia specialists, the Liberal Senator Russell
Trood.

GILBERT: Okay, all right, well, let's move on. One last issue, the defence spending. It's been
reported in the Sydney Morning Herald, Craig, exorbitant, apparently, outlays. Is there enough
scrutiny of the defence budget when you're hearing about private jets being used and so on?

EMERSON: This government has moved to achieve savings of $20 billion over 10 years in the defence
budget and it's put in place measures to do that.

Always we're on the look for savings. I must say, however, though, that some of the claims in that
newspaper article didn't strike me as, you know, shocking extravagance, that defence personnel take
taxis. What are we going to do? Have them go around in armoured personnel carriers? I mean, you
know, they get on planes. They've got bills with Qantas. Well, you know, how are they going to get
around Australia?

Now, some of the other things that looked a little more concerning to me, about allegations of
phantom contracts. Of course they need to be examined. Of course they need to be looked into and if
anyone's got any information about those, and I'm sure our own authorities will look into those,
but let's not just throw the baby out with the bathwater and say that, you know, expenses on such
things as taxis and air fares is some sort of rort.

People have got to get around.

GILBERT: And the other thing is, Senator Brandis, that the Howard Government quarantined defence
spending...

BRANDIS: Sure.

GILBERT: ...so this is probably something, if it is a problem, that emerged in your time in
government.

BRANDIS: Well, it's a problem that has emerged now on the Labor Party's watch and it's not clear
from the report in the Sydney Morning Herald how far back the problem goes but can I just make this
point? We do have a Minister for Defence Procurement, Greg Combet. This is his responsibility. Now,
the problem with Mr Combet is that the Prime Minister obviously regard Mr Combet as a bit of a
trouble-shooter because he's loaded him up as Minister Assisting the Minister for Climate Change
and now after the collapse of confidence in Peter Garrett he's been given responsibility for
mopping up the failed pink batts insulation scheme fiasco, so what you have is a Minister for
Defence Procurement, responsible for the superintendence of a $26 billion a year section of the
budget, who basically doesn't have enough time to do his job because he's being asked by the Prime
Minister to put out bushfires in other areas of the government.

EMERSON: He's a good friend of mine and he does do an enormous amount of work.

BRANDIS: I'm sure he does an enormous amount of work.

EMERSON: An enormous amount, with the Defence Minister, John Faulkner.

BRANDIS: Sure but this is what happens - this is what happens where you have a part-time Defence
Procurement Minister.

GILBERT: All right, we're out of time. I'd love to give you the opportunity to reply...

EMERSON: Next time.

GILBERT: ...to your friend, next time, Craig, and Senator Brandis, appreciate your time.

BRANDIS: Thank you, Kieran.

GILBERT: We will have full coverage of President Yudhoyono's visit to Canberra, to Australia and,
of course, his historic address to both houses of Parliament at two o'clock tomorrow afternoon.